Ec101F10PastQsKey_101204

# Ec101F10PastQsKey_101204 - c Copi, Ec101, Fall 2010,...

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ˇ Copiˇ c, Ec101, Fall 2010, 12/04/2010, Answer Key to past questions. Remark: The answer key below gives some analysis of problems that are not enumerated - for the other questions, there are just simple answers. e. This is straight-forward. b. Write q for the total quantity produced. As in the lectures, we can derive that under Cournot competition, the quantities that the ﬁrms will produce in equilibrium need to satisfy equations q = 1 3 (2 K - c 1 - c 2 ) ,q 1 = ( K - q ) - c 1 ,q 2 = ( K - q ) - c 2 . Plugging in the numbers, the answer is apparent. c. See answer to previous question. d. One way to proceed is to notice that a., b., and c. are wrong. Another possibility is to try things on an example, for instance plugging in the numbers from the previous problem. Another very simple way to see it is to notice that if their productions were the same, the ﬁrm with the lower cost will always make a bigger proﬁt for any total quantity produced. Hence, if the total proﬁts of the two ﬁrms under Cournot were larger than when ﬁrm 1 was a monopolist, it could simply produce the total Cournot

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## This note was uploaded on 09/05/2011 for the course ECON 101 taught by Professor Buddin during the Fall '08 term at UCLA.

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Ec101F10PastQsKey_101204 - c Copi, Ec101, Fall 2010,...

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